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Illustration: Sarah Grillo/Axios

Ten years ago, hubristic Wall Street geniuses came this close to destroying the global economy, saved largely by the Fed feeding trillions of dollars into banks in the U.S. and around the world.

Why it matters: This time, unlike in 2008 and 2009, it may be that no one comes to the rescue, given new U.S.-China tensions, frayed trans-Atlantic relations, and Trump Administration hostility to multi-lateral actions.

The 2008 financial crisis is not really over: Even as the U.S. stock market bull run made history today, the crash continues to reverberate in the form of still-recovering economies and massive global distrust in institutions.

  • The memory and residue of the crash are primary reasons why economists and policymakers are on the lookout for the next big financial crisis.
  • If a new crisis is brewing, it's in emerging markets, says Adam Tooze, a Columbia university professor and author of Crashed, a history of the 2008 financial crisis. Emerging economy stock markets are already down about 10% this year in aggregate.

The background: The financial crisis was triggered by U.S. mortgage defaults, which exposed the folly of trillions of dollars in exotic financial instruments packaged, sold and resold to investors and banks around the world. But even banks with no mortgage exposure ended up in trouble when global interbank lending dried up.

  • What makes the story chilling and gives it continued relevance is the degree to which global banking was and continues to be hugely intermeshed — and how it relies to even a greater degree on the U.S. and the dollar.

I caught up with Tooze by phone on his U.K. book tour. The new problem is China, which just by 2015 had borrowed $1.7 trillion in foreign currency, mostly in dollars, to finance its investments.

Tooze called China "the hub of a complex of emerging market economies," with connected manufacturing and other supply lines, commodity and product sales, and countless other businesses relying on the yuan.

  • A big danger is movements in the yuan, he said. "One of the nightmares is that China would allow its currency to move dramatically and bring down all of the emerging markets," he said.
  • Emerging market economies, he said, do not have the same cash reserves as China to tide them through a devaluation crisis, he said.
  • Already, the yuan has devalued by about 10% against the dollar this year. "We are probably testing the limits and the world is watching anxiously," he said.

Go deeper

The robotaxi era will require a rethinking of vehicle safety

Zoox's robotaxi is bidirectional and includes more than 100 safety innovations. Photo: Zoox

Vehicles are being reimagined as autonomous, electric, toaster-shaped robotaxis. Now their safety has to be reworked too.

The big picture: There's more to self-driving cars than just removing the steering wheel and pedals. The entire vehicle needs to be redesigned for riders, not drivers, so their safety can be assured even when they're not in control.

Apple puts antitrust bills in privacy spotlight

Illustration: Sarah Grillo/Axios

Apple warned Wednesday that new antitrust legislation would place iPhone customers' privacy and security at risk by limiting the company's control over what apps users can install.

Driving the news: Apple CEO Tim Cook called House Speaker Nancy Pelosi and other top Democrats to argue that the antitrust bills would hurt innovation and consumers, per a New York Times report.

Felix Salmon, author of Capital
1 hour ago - Economy & Business

The small business boom

Expand chart
Data: Census Bureau via John C. Haltiwanger of the University of Maryland; Chart: Axios Visuals

One of the most unexpected pandemic winners might just turn out to be new small businesses.

Why it matters: The number of entrepreneurs starting a business easily hit a record high in 2020, according to a new analysis by University of Maryland economist John Haltiwanger. That's a surprising result, given the severity of the crisis.